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Huntington Bancshares Profit Rises 21% (Update 1)

  • Huntington Bancshares reports first-quarter earnings per share of 17 cents.
  • Analysts were expecting EPS of 14 cents.
  • Noninterest income grew 24% from the fourth quarter and 21% year over year.

Updated with interview comments from Huntington CEO Stephen Steinour.

NEW YORK ( TheStreet) -- Huntington Bancshares (HBAN - Get Report) on Wednesday reported a 21% earnings increase, with boosts from auto loan securitizations and very strong mortgage volume.

The Columbus, Ohio, lender reported first-quarter earnings of $153.3 million, or 17 cents a share, compared to $126.9 million, or 14 cents a share, during the fourth quarter, and $126.4 million, or 14 cents a share, during the first quarter of 2011.
Huntington Bancshares CEO Stephen D. Steinour

The first-quarter earnings came in ahead of the 14-cent estimate among analysts polled by Thomson Reuters.

The company's noninterest income increased 24% from the fourth quarter and 21% year over year to $285.3 million, reflecting $23 million in gains on auto loan securitizations and $46.4 million in mortgage banking income. The mortgage income increased from $24.1 million the previous quarter and $22.7 million a year earlier, and was "driven by an $11.6 million net mortgage servicing rights (MSR) improvement and a $10.1 million increase in origination and secondary marketing income."

Huntington reported that its average commercial and industrial loans grew at a 17% annualized pace during the first quarter. The average balance for these loans was $14.8 billion in the first quarter, increasing 4% sequentially and 13% year over year.

Average total loans and leases were $38.2 billion in the first quarter, declining slightly from the fourth quarter but increasing 4% year over year, as the increase in commercial and industrial loans was partially offset by declining consumer loan balances.

Huntington saw its strong deposit growth continue, with noninterest bearing checking account deposits growing 5% sequentially and 54% year over year to $11.3 billion during the first quarter. The company's net interest margin -- the difference between its average yield on loans and investments and its average cost for deposits and wholesale borrowings -- was 3.40% during the first quarter, increasing from 3.38% the previous quarter, but down slightly from 3.42% a year earlier.

The first-quarter results were also boosted by an $11.4 million bargain purchase gain from the company's acquisition of the failed Fidelity Bank of Dearborn, Mich., from the Federal Deposit Insurance Corp. on March 23.

Huntington's noninterest expenses increased 8% sequentially and 7% year over year to $462.7 million during the first quarter, mainly because of a $23.5 million addition to litigation reserves.
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